L.A. Land: No More Denial in Long Beach

There is finally a bit of good news related to LB real estate (well, good unless you're a seller).

According to the L.A. Times real estate blog, denial is dead in Long Beach.

Well, sort of. The post reads:

Various economists say Los Angeles-area home prices need to fall 40% to 50% from their peak to match area incomes. Except for foreclosed houses in the deep inland markets, few properties are for sale at those levels.

But developers of a new Long Beach condominium building a block from the ocean have decided to take a leap forward. On August 24, 39 units will be up for auction at West Ocean Two, with opening bids set about 40% to 50% below earlier list prices.

And what, pray tell, do you think that will do to prices in the area? Well, sparky, I believe it will absolutely crush them. New construction trumps old, weathered, dilapidated crap any day of the week. Ouchies.

More good news. In the comments section of the IrvineHousingBlog, a discussion of Long Beach real estate provided a glimmer of what's to come even in supposedly "immune" areas such as Belmont Shore.

A poster highlighted a Countrywide-owned, 760 square foot 2 bed/1 bath going for $570,000 (to those unfamiliar with this high-demand area, that may sound nuts for such a small house but it's significant). When was the last time a Belmont Shore single family residence--even a run-down POS--asked below $600k? This means utter disaster for any distressed sellers who were too stubborn, delusional, or stupid to price accordingly during the Summer Selling Seasontm.

The listing information still hasn't been fixed--likely because the CountryWide representative is overwhelmed with listings or no longer works there--but it's a DETATCHED HOUSE in a prime location of Belmont Shore.

http://www.redfin.com/CA/Long-Beach/79-Argonne-Ave-90803/home/7596275

You read that asking price correctly: $569,900. In Belmont Shore. With a two car garage (according to my spies). On the beach side of 2nd Street. A BLOCK FROM THE BEACH!

There are no pictures yet, but from what I understand it's not a fixer-upper. I mean, even fixer-uppers sell for well above $600k. Hell, fumigation tents sell for more than $600,000 in this area!

You other sellers are so screwed. By smugly rejecting "offensive" offers due to a belief that real estate never goes down, your neighborhood is immune, or the "subprime riff raff" being foreclosed on don't live on your street, you blew it.

A good rule of investing is, "It's better to sell a year too soon than to sell one day too late." Well, you're all officially a day late.

Look, I get it. Nobody wants to admit the neighborhood they paid 7x times their annual income to squeeze into isn't actually immune from market realities. Hell, 62% of homeowners nationwide believe their property value actually WENT UP or stayed the same. Delusion still reigns supreme.

Some may say, "But RE in the LBC, that Shore house is only one example!" or "It will be bid up way past the $570k asking price, so there!"

We'll see about that, Chachi.

All I know is that we've just seen conclusive proof that supposedly immune areas are vulnerable. And one foreclosure is all it takes to set a new comp, reduce surrounding home values, and send already-strapped neighbors into the black abyss of housing distress. Hence, more foreclosures. And so on.

What does it all mean?

NO IMMUNITY FOR YOU!

Shorn in The Shore: UPDATE II

I just wanted to update you on a certain optimistic seller in Belmont Shore.




yyyyyyyyyyyep, still delusional.

The asking price was last reduced to $399,000 on May 12 and the listing hasn't been touched since.

So, just what exactly is this sad-sack over-decorator waiting for? A return to the 24.4% annual appreciation witnessed during the five years prior to this numbskull's 2005 purchase?

Yeah, about that. I thought I sent out a memo.

Anyhow, the real estate world has changed considerably since May and I can't fathom why this thing is still on the market. I mean, the listing hasn't been updated in THREE MONTHS--which I might add were the PRIME SUMMER SELLING MONTHS. No price reductions, no new pictures, nada.




Look friend-o, just do what everyone else (including your neighbor at #301 and most of the properties featured on this site) is doing and take it off the market. Obviously that $3,300 in monthly carrying costs isn't hurting too badly, otherwise you would have priced to sell from the outset, right? So you've established that you're not desperate (or reasonable).

But how much longer can you wait for this fantasy buyer to bail you out? Another 205 days?

I mean, the pool of individuals or couples with $80,000 in the bank and $100,000 household incomes is very small--even in Belmont Shore ($71,028 median income). But even if those magical buyers you seem so confident will rescue you finally appear, do you really think this is the place they would choose to live during the next five to ten years? You see, the problem is that you overpaid for an undesirable property in a desirable neighborhood.

The short list:

• It's cramped at 900 square feet
• Community laundry (ugh)
• ONE parking spot in Belmont Freaking Shore
• The kitchen is atrocious and will appeal only to a very specific buyer
• Although a minor point, most walls need repainting

And I know it's tough. I'd hate to be viewed as a financial failure too. But then again, I'd never be foolish enough to "buy" an apartment I could rent for half the cost. So, since you've obviously been able to comfortably swing your mortgage payment for more than three years, why bother trying to sell in this environment? Do us all a favor and just give up! Stop wasting valuable space on the MLS and freaking everyone out about the amount of inventory on the market.

Especially with the slower selling seasons of fall and winter approaching, there's no hope for you selling at this asking price. And since reducing your asking price to a reasonable amount would result in the loss of $100,000 plus commissions--not to mention another ~$130,000 in carrying costs since your '05 purchase--you only have two choices:

1. Send the keys back to the bank and and rid yourself of this albatross that, given your astronomical purchase price, won't produce a profit for another 20 years, or

2. Take it off the market today, relax, and start enjoying "Belmont Shore living at it's [sic] finest."

Us taxpayers would prefer that you choose the latter, but either way, do us all a favor and throw in the towel. If you can't stand the heat, get out of the Smurf-blue kitchen.

Oblivious

I just got back from an incredible weekend at Lollapalooza in Chicago. For those of you not familiar, Lollapalooza is a three-day outdoor music festival. This is a real estate blog so I won't go into music reviews, but suffice to say it was an incredible experience in a world-class city.

And as I stood in Grant Park listening to great music and staring at the half-full (or half-empty, depending on your disposition) high rise condos, I noticed a trend that mirrored what is currently going on in Long Beach real estate.

As certain popular bands played, some people insisted on being hoisted up onto someone's shoulders so they could enjoy a great, unimpeded view of the performances. Unfortunately, the masses of people situated behind these self-centered twits had their formerly-excellent view, which they waited up to an hour before the show started to secure, ruined.

Naturally, the formerly-patient fans revolted and within minutes loose change, ice cubes, trash, empty cups, and food were launched in the shoulder sitters' direction. Every successful hit resulted in a chorus of applause and cheers. Amazingly, the shoulder-holstered individuals remained oblivious to what was going on. Completely, totally ignorant. Being pelted with almonds, quarters and garbage through several songs did nothing to deter them from enjoying their privledged, wholly-oblivious perch.

Eventually, the throngs of frustrated fans were victorious, but not without a reluctant stand-off and plenty of offended, dirty looks from the pelted.

Metaphorically, the parallels between these oblivious, entitled fans and greedy Long Beach sellers are pretty clear. Long Beach ain't Chicago, yet sellers still insist on pricing that way, far beyond fundamentals. And they watch, with their arms folded, resolute in their entitlement and myopic beliefs about their position, as the days-on-market pile up like so many coins, ice cubes, or cashews. They are oblivious to reality and market fundamentals, much to the frustration of responsible, patient buyers waiting to buy affordable, economically-sound homes to live in--not to flip like a stock.

Full posts to resume this week.

The Doctor is Out.

I'm flying to Chicago for the weekend, so no updates until sometime next week.

Enjoy the beautiful weather.

We're Number 1! We're Number 1!

Finally, the day has come.

According to another great post from Dr. Housing Bubble, Long Beach has finally claimed its #1 spot:

That's right, kids. 90813 in LB has claimed the top spot in year-over-year price declines (-65% since 6/2007). In your face, Pasadena!

Congratulations on your profound accomplishment, Long Beach. Go ahead and take a victory lap...you earned it.